Jefferies analysts say Premier Oil share price set to soar ahead of earnings update

The UK-based oil and gas company will release its latest trading and operations update on Wednesday 15 July, with the stock suffering heavy losses due to a crash in oil prices amid weakening demand due to the Covid-19 pandemic.

Premier Oil will release its latest trading and operations update on Wednesday 15 July, with the stock suffering heavy losses due to a crash in oil prices amid weakening demand due to the Covid-19 pandemic.

But thanks to national lockdowns beginning to ease and OPEC+ led production cuts, oil prices have started to stabilise and found support at $40 - $42 range per barrel.

In fact, the secretary general of OPEC said on Monday that he believes that oil markets are moving closer to balance ahead of the group meeting with Russia to decide whether or not to ease production cuts from August.

Premier Oil has continued to struggle, however; with the stock falling 24% since hitting a 15-week high of 53p back on 23 June and looking likely to continue its trend lower this week.

Premier Oil is trading at 41p per share at the time of publication.

Analysts at Jefferies believe Premier Oil shares are set to soar

Even though Premier Oil continues to see its share price struggle amid challenging market conditions, analysts at Jefferies remain optimistic about the stock.

Analysts at the US-based investment bank reiterated their ‘buy’ rating for Premier Oil on Monday and set a target price of 68p per share for the stock – implying a potential upside of 65%.

Premier Oil: Technical Analysis

Shares in Premier Oil tumbled by nearly 90% from their peak at £120.85 in January to the trough at £13 in mid-March. But since hitting those lows they have recovered over 200 percent, but are still down 60% on the year.

Premier Oil stumbled into resistance at the 38.2% Fibonacci retracement line at £54.21 and came close to testing the 23.6% fib line at £38.47 last week, according to Victoria Scholar, market analyst and presenter at IG.

‘The psychological £40 mark looks to be a key support level that the stock should try to remain above if the last few month’s positivity is to remain on track,’ she said. ‘However June provided two forewarnings of potential weakness ahead, firstly with a sell signal from the RSI dropping below 70 and secondly with negative divergence with the MACD histogram.’

‘But the stock is yet to break below the ascending trendline of support, which would be bearish for its outlook,’ Scholar added.

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